Breaking up, as the song goes, is hard to do. It’s especially difficult when the split involves legal costs, piles of paperwork and waves of acrimony. We’re not talking about divorce here, but about the termination of an employee—something that almost every entrepreneur has to do at some point.
It’s tricky terrain, and not just because for all but a sadistic few, firing people is a painful task. Terminations for poor performance (that’s “with cause” in legalese) regularly make their way into court and, as a number of recent decisions have shown, can result in the employer having to pay a disgruntled ex-employee as much as two years of severance. Add to that possible fines for mental distress, punitive damages and damages relating to how the termination was conducted, and the exercise can get very costly. What’s important to keep in mind is that employers often end up paying up, not because the dud shouldn’t have been fired but because the employer bungled the dismissal.
If you’re forced to justify a “with cause” termination—and there’s a good chance you will if the dismissed person is at all litigious—you will have to build a case that goes well beyond “I didn’t like the guy.” Specifically, you will have to prove that you first offered the staffer a chance to redeem himself by establishing a rigorous performance-improvement plan. That’s not what you want to hear when you’re eager to get the laggard out, but it’s the best way to convince the courts that you had cause to terminate. Here is how to do it right to protect your business:
1. Don’t lose your cool. Impulsive decisions to fire someone rarely work in an employer’s favour. Unless you have evidence, based on a thorough workplace investigation, of law-breaking or serious misconduct, get a legal opinion before you decide, or do, anything.
2. Honestly assess turnaround prospects. When dealing with an underachiever, start with the question: Can his performance be rehabilitated? Ignore the excuses your entrepreneurial optimism may prompt you to make (“He always tries so hard!”; “She’s such a nice person!”) and look at the situation objectively. If there’s no hope this person will ever thrive in his current position, it may be best to suck up the expense (read: severance) and terminate without cause. The severance will start at roughly one month’s pay per year of service for unskilled positions, but it could be much higher for executive positions.
3. Make a sincere effort to rehabilitate. If you want ammunition to support a “with cause” firing, you need to put the employee through a formal performance-improvement process. Be prepared to give the staffer a reasonable opportunity to get better—typically, three to six months, depending on his scope of responsibility.
As the employer, it’s your duty to clearly communicate your performance concerns and your expectations for the role, to give the employee reasonable time and resources to improve, and to monitor and document his progress. (A paper trail is key.) If the staffer isn’t improving within the timelines you’ve set out, you should provide escalating written warnings. Make it crystal clear to the employee throughout the rehabilitation process that his job is on the line, so he can’t plead ignorance about the consequences later.
But make sure you’re not just going through the motions while fully intending to fire the employee in the end. You’ll be in trouble if a judge determines your efforts to rehabilitate the worker’s performance were superficial—for example, setting targets unattainable by any reasonable metric or failing to formally measure improvements.
If, in the end, the employee still isn’t up to snuff, you can show her the door, secure in the knowledge you’ll be able to defend against any legal action. It’s not as snappy as the old maxim “Hire slow, fire fast,” but it’ll serve you better in the long run.
Read: How Not to Hire Losers